Legislation Would Eliminate Mandatory Arbitration Clauses in College Enrollment Contracts

Thursday, September 20, 2012

As part of his fight to make sure consumers can hold large institutions accountable, U.S. Sen Al Franken (D-Minn.) introduced legislation that would make sure students can seek justice through the court system if they feel they have been wronged by their college or university. The Arbitration Fairness for Students Act would ensure that colleges and universities that receive federal student aid can't include a mandatory arbitration clause as part of their required enrollment contract. Under the current system, students at some schools cannot use the court system in the rare circumstance that a college egregiously wrongs them-such as if the college lies during the recruiting process-and are instead forced to use a private, closed-door process.

"When students go off to college or enroll in classes later in life, they should be able to count on the educational services they were told they'd receive - and most of the time, they can," said Sen. Franken. "But on the rare occasion that a college egregiously takes advantage of a student, they should have the right to access our court system to address their grievances, and that's what this bill would give them."

"Preventing college students who have systematically been deceived and misled from exercising their full legal rights is bad for students and fails to deter misconduct by some colleges," said Sen. Tom Harkin, chairman of the Senate Committee on Health, Education, Labor and Pensions and lead cosponsor of the legislation. "My recently released report on the for-profit sector demonstrated that these clauses, which students have no choice but to accept, abound in their enrollment contracts. So, not only do these colleges prey on vulnerable students through aggressive and deceptive marketing, but they also bar them from suing them, adding insult to injury. In addition, arbitration is too often stacked against the student and done in secret. The Arbitration Fairness for Students Act will level the playing field for students so they and the public can hold colleges accountable. As we continue our efforts to protect taxpayers and students, this common-sense reform is yet another essential step to discourage fraud, waste and abuse by colleges and safeguard federal financial aid dollars."

Since joining the Senate, Sen. Franken has fought to protect consumers and workers from mandatory arbitration clauses. In 2009, he passed bipartisan legislation that restricts funding for defense contractors who commit employees to mandatory binding arbitration in the case of sexual assault and other civil rights violations. Last year, after the Supreme Court ruled 5-4 in AT&T v. Concepcion that companies can ban class action suits in contracts, he introduced the Arbitration Fairness Act to restore the right to class action in employment, consumer, and civil rights cases. And last October, he introduced the Consumer Mobile Fairness Act, which would eliminate forced arbitration clauses in cell phone and mobile data service contracts.

Yesterday, Sen. Franken spoke on the floor of the Senate in favor of the Arbitration Fairness for Students Act, which is also cosponsored by Sens. Bernie Sanders (I-Vt.), Dick Durbin (D-Ill.), Mark Begich (D-Alaska), Patrick Leahy (D-Vt.), Richard Blumenthal (D-Conn.), and Sheldon Whitehouse (D-R.I.). Sen. Franken's remarks can be found here and video of his speech can be found here.